US banking boom
Mixed elsewhere
Amid what has been a mixed US earnings season where several big names have undershot expectations, the biggest banks on Wall Street have been making hay while the sun has shone on them during the opening three months of 2013. With equity markets soaring and dealmakers dusting off plans for IPOs and acquisitions, the rainmakers of Wall Street have enjoyed themselves. This week saw Bank of America quadruple its profits to $2.6bn and Goldman Sachs reported a 9 per cent rise in revenues to $10.1bn, although the good times may not last, with Goldman warning that its pipeline of corporate deals has shrunk compared to the end of 2012.
Forecast pain
IMF cuts UK
The International Monetary Fund (IMF) has further cut its forecasts for UK growth for this year and next as part of a wider downgrading of global growth forecasts. The IMF sliced 0.3 per cent off its January predictions for UK GDP growth, cutting it to 0.7 per cent in 2013 and 1.5 per cent next year, citing the continued austerity policies of the coalition as a key drag on growth. The IMF suggested that "consideration should be given to greater near-term flexibility in the fiscal adjustment path". Global growth forecasts were cut by 0.2 per cent to 3.3 per cent.
Tesco hit
US pull-out hurts
UK retailing giant Tesco signalled its final retreat from the US alongside its full-year results on Wednesday. Tesco had already taken a £1bn hit against its failing Fresh & Easy operation in the US and this confirmation of a full withdrawal from US operations came as little surprise. But it does signal the latest failure by an established UK retail name to gain a foothold in the US grocery market and is likely to put off any other pretenders for some years to come. Elsewhere, Tesco's performance was also rather mixed as writedowns totalled £2.4bn, including £804m for property projects it is no longer pursuing. Management has made group-wide strategic changes to reinvigorate Tesco's performance, but will need more time before their full effect will be seen.
See US exit hammers Tesco's profits
Boost ends
UK jobless rise
The unusual phenomenon of job creation even in a shrinking or moribund UK economy may be coming to an end. The number of people in work fell by 2,000 in the three months to February, the first reversal in the number of people employed for 16 months. Unemployment has also ticked up, by 70,000 to 2.56m people, equivalent to 7.9 per cent of the workforce. Among young people, the jobless crisis remains pronounced with another 20,000 jobless 16-24 year olds added, taking the total to 979,000 out of work, or 21 per cent of the workforce in that age category.
Further funding
Minutes hint
The Bank of England's Monetary Policy Committee is clearly considering all angles in its bid to keep the monetary floodgates open. In the minutes for the latest MPC meeting, members debated extending the Funding for Lending programme which has helped to inject cheap credit into the lending markets that is designed to be passed on by banks to small- and medium-sized enterprises and through lower mortgage rates. But the level of bond purchases under the quantitative easing programme will remain the same after the outgoing governor, Sir Mervyn King, was outvoted for the third consecutive month on a proposal to increase purchases by a further £25bn.
Euro auto woe
Demand slumps
The depths of economic retrenchment in the eurozone were illustrated again this week with news that car sales have fallen through the floor pretty much across the continent, with very few manufacturers spared the pain. European car sales slumped by 10.2 per cent in March, with the powerhouse of the eurozone, Germany, leading the way with a reversal in sales of 17.1 per cent compared with the previous March. Demand for new cars across the eurozone has fallen for the past 18 months and appears to be picking up speed rather than showing signs of bottoming. Among the hardest hit manufacturers last month were Toyota, Ford and Peugeot/Citroen, with sales reversals of around 16 per cent each.
